TMI Blog2018 (9) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO to just follow the assessments already concluded unless there is an incriminating material found in the search to disturb the said concluded assessment. In our considered opinion, this would be the correct understanding of the provisions of section 153A as otherwise, the necessity of bifurcation of abated and unabated assessments in section 153A would become redundant and would lose its relevance. Hence the arguments advanced by the ld DR in this regard deserves to be dismissed. As there was absolutely no incriminating material found during the course of search in the instant case with regard to the issue of share capital, share premium except understanding the discovery of modus operandi of raising bogus share capital based on the certain statements recorded from entry operators in some cases in West Bengal. Since the issue is addressed on preliminary ground of absence of incriminating materials, we refrain to give our findings on the merits of the addition u/s 68 of the Act for the Asst Year 2010-11 - Decided in favour of assessee. - I.T.(SS)A No. 48/Kol/2018 - - - Dated:- 5-9-2018 - Shri S.S. Godara, JM And Shri M.Balaganesh, AM For the Appellant : Shri S.M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Sl. No. Name of the Company to whom shares were allotted No. of Share Face Value Rs. Premium Rs. Amount Rs. 1. M/s Param Sagar Gem Jewellery Pvt. Ltd. 50,000 10 40 25,00,000 2 M/s Subhdristi Complex Pvt. Ltd. 50,000 10 40 25,00,000 3 M/s Swagatama Enclave Pvt. Ltd. 50,000 10 40 25,00,000 4 M/s Rangoli Dealer Pvt. Ltd. 50,000 10 40 25,00,000 5 M/s Blue Print Securities Ltd. 50,000 10 40 25,00,000 6 M/s Maa Santoshi International Ltd. 50,000 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had provided name address of the share applicants, PAN of the share applicants, conformation letters from the share applicants, their ITR acknowledgement, copy of profit and loss account and balance sheet, source of the funds provided, bank statement, ROC documents etc. With regard to justification for premium, the assessee company stated that it owns the brand Anu Sarees , one of the major seller of cotton printed sarees in Eastern India. This is a well established branch and assessee holds goodwill in entire Eastern India . The company is also regularly increasing its turnover and consistent increased net profits. Due to its inherent goodwill , the assessee was able to raise share capital with premium. The assessee also gave the information regarding the changed name of the shareholders together with the latest address before the ld AO and accordingly sought for the details of notices sent to those shareholders at their present address and also requested the ld AO to inform the assessee the name of the parties from whom the notice has been returned unserved. It was submitted that from the documents filed pertaining to the share subscribers, it could be seen that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso upheld the action of the ld AO on merits of the addition u/s 68 of the Act as well. Aggrieved, the assessee is in appeal before us. 6. With regard to the preliminary argument of the ld AR that there was no incriminating material found during the course of search with regard to the issue of share capital, share application money and share premium, the ld DR argued that the expression incriminating material is not found in the provisions of the Act and it is only the Hon ble Courts which had imported those words while rendering the decisions. He stated that the Hon ble Courts are divided on this issue and placed reliance on the decision of the Hon ble Karnataka High Court in the case of Canara Housing Development Co vs DCIT reported in (2014) 49 taxmann.com 98 (Kar HC) wherein it was held that search assessments could be framed even without the existence of incriminating materials found in the course of search. He argued that the basic foundation for conducting the search is governed by the provisions of section 132 of the Act which has to be read harmoniously with section 153A of the Act. There are three conditions based on which a search action could be initiated u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the rival submissions. We find it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2010-11 was originally completed u/s 143(1) of the Act and the time limit for issuance of notice u/s 143(2) of the Act had expired and hence it falls under concluded proceeding , as on the date of search. We hold that the legislature does not differentiate whether the assessments originally were framed u/s 143(1) or 143(3) or 147 of the Act. Hence unless there is any incriminating material found during the course of search relatable to such concluded year, the statute does not confer any power on the ld AO to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceeding was not pending on the date of search to get itself abated. The provisions of section 153A of the Act are reproduced hereunder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be understood in the following manner pursuant to the search conducted u/s. 132 of the Act :- (a) Notice u/s. 153A of the Act would be issued on the person on whom the warrant of authorization u/s. 132 of the Act was issued for the six assessment years preceding the year of search and assessments thereon would be completed u/s. 153A of the Act for those six assessment years. (b) In respect of the year of search, notice u/s. 143(2) of the Act would be issued and assessment thereon would be completed u/s. 143(3) of the Act. (c) In respect of concluded assessments prior to the year of search, no addition could be made in the relevant assessment year unless any incriminating material is found during the course of search with respect to the relevant assessment year. (d) Pursuant to the search u/s. 132 of the Act, the pending proceedings would get abated. In respect of abated assessments, the total income needs to be determined afresh in accordance with the provisions of section 153A and other provisions of the Act. 6.4.1 The concluded assessments for the purpose of section 153A of the Act shall be - (i) assessment years where assessments are alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disclosed and the undisclosed income would be brought to tax . (iv) Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the LD AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. (v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to complete assessment proceedings. (vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in 380 ITR 573 (Del) , the revenue preferred Special Leave Petition before the Hon ble Supreme Court and the same was dismissed by the apex court which is reported in 380 ITR (St.) 4 (SC). Hence it could be safely concluded that the decision of Hon ble Delhi HC in the case of Kabul Chawla supra would have to be considered on the impugned issue and in any case, the Hon ble Supreme Court in the case of CIT vs Vegetable Products Ltd reported in 88 ITR 192 (SC) had held that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. 8.6. We also find that the Hon ble Jurisdictional High Court recently in the case of Principal CIT vs M/s Salasar Stock Broking Ltd in G.A.No. 1929 of 2016 ITAT No. 264 of 2016 dated 24.8.2016 had endorsed the aforesaid view of Hon ble Delhi High Court in Kabul Chawla s case and also placed reliance on its own decision in the case of CIT vs Veerprabhu Marketing Ltd reported in (2016) 73 taxmann.com 149 (Cal HC). 8.7. We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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